Weekly Wool Market Commentary 15/03/2018

Week 37:
The AWEX EMI continued its downward trend closing the week on 1751c – down 27c at auction sales in Australia this week. With the previous week’s losses of 52c still fresh in our minds, the trade were expecting the market to find a new level. However, with the offering containing a wide range of wool types, buyers entered the week somewhat cautiously being selective in their purchases.

Merino Fleece types in the northern markets lost 35-65c as the eastern selling centre MPG’s achieved some alignment, meaning the heavy losses experienced in last week’s southern MPG’s seemed to be closer to this week’s level. Lots with qualifiers that have been overlooked by buyers in the previous markets are now being discounted more heavily and the best style lots bearing favourable specifications were at time level with last week’s quotes.Merino Skirtings followed the fleece with the best style length and specifications holding close to last week’s levels and the poorer styles feeling the full brunt of the limited competition.Crossbreds could not maintain the positive trend of the past 3 weeks, with prices 5-20c weaker across all types this week. Once again, poorly prepared lines and unclassed and unskirted lots were the hardest hit.Merino Cardings followed their combing counterparts, falling 20-30c for the week.Merino lambs seemed to continue to attract good competition whilst the locks stains and crutchings waned slightly.

The Pass in rate of 9% reflects the substantial movements in the market where most sellers are willing to meet the market within reason. Despite the falls, the week’s sales produced a total of $73.27m (Ave $1,887/bale) and a year-to-date total of $2,442.79m (Ave $1,878/bale). Next week 38,849 bales are presented for sale – the lowest offering for some time leading into the pre-Easter sale, being held at the Royal Easter Show.

Despite the record high levels we are experiencing this year, the quality of clip preparation disappoints me time and time again. Each week, we see poorly prepared lots neglected by the buyers and each week we see the best prepared lots achieve above market prices.
My view is that the hangover from some past systems requiring no skirting and minimal preparation are still with us and hindering our market to gain further traction. The AWEX Code of practice for clip preparation is really not the standard we need to achieve, rather a benchmark that we should be trying to exceed. If the buyers of our wool are expected to continue paying $20-30 clean per kilogram for our wool, then we should be increasing our effort to supplying what they want.
Whilst there are plenty of wool producers meeting and exceeding the COP, there are too many falling short and hindering the wool industry. In recent times there have been wool classers prosecuted for “lending” their stencil to shearing sheds that they have not attended. Simply, this is fraud and punishable by law.
So my message to all is that if you want the best prices please consider presenting a premium product to our buyers, and all the players in the chain – including the shearing contractors – have a responsibility to the future of our magnificent fibre. Rant over!

Despite the 4% fall in the EMI over the past three weeks it is still an exciting time to be in sheep and wool.
~ Marty Moses

AWEX Comment:
After the downward movement experienced in Week 36 where the Benchmark Eastern Market Indicator (EMI) lost 52 cents, the Australian Wool Market has suffered further corrections in Week 37.
Quantities decreased slightly, and 42,645 bales were offered to the trade. As is often the case in a falling market, buyers became more selective in their purchases. The result was that small impurities that were over looked in the rising market suddenly attracted discounts.
Wools with very high mid-breaks (>75 in particular) were also heavily discounted as buyers struggled to average them into their purchases. Inversely, any lots possessing mid-breaks of less than 40 attracted significant premiums and in some cases sold at levels very close to those achieved at the previous sale.
In general terms 20.0 micron and finer lost 40 to 60 cents, the broader microns in 20.5 and coarser were less affected and posted discounts of 20 to 40 cents.
The result was a 27-cent reduction in the EMI, which closed the week at 1751 cents. The EMI has dropped 83 cents over the previous six selling days, which equates to a 4% drop.
After being the only sector not to suffer corrections last week, the crossbreds succumbed to the falling market in this sale. All types and descriptions across the entire spectrum recorded general losses of between 10 and 20 cents, with the poorly prepared lines suffering the greatest reductions.
The oddments have continued their downward trend, losing ground for the fourth consecutive week. Prices were generally reduced by 10 to 30 cents, resulting in the three carding indicators falling by an average of 17 cents.
Next week there is another reduction in the national offering. Currently, there is 38,849 bales on offer in Sydney, Melbourne and Fremantle, nearly 9.0% less than this week’s offering.